In eukaryotic cells, accumulation of unfolded protein in the endoplasmic reticulum induces transcription of a family of genes encoding endoplasmic reticulum protein chaperones through a conserved unfolded protein response element. In Saccharomyces cerevisiae, activation of a transmembrane receptor kinase, Ire1p (Ern1p), initiates signaling, although the mediators immediately downstream of Ire1 kinase are unknown. Here we demonstrate interaction of Ire1p with the transcriptional coactivator, Gcn5p (for general control nonrepressed; also known as Ada4p). Gcn5p associates with other Ada (for alteration/deficiency in activation) gene products in a heteromeric complex and has histone acetyltransferase activity. We show that the Gcn5/Ada complex is selectively required for the unfolded protein response but not for the heat shock response. A novel mechanism is proposed in which activation of a receptor kinase recruits a transcription coactivator complex to a specific chromosomal locus to mediate localized histone acetylation, thus making specific gene sequences accessible for transcription.